* Control systems are important to an organization because

Imagine an airplane without a pilot. Not only that plane gets lost but also thepassengers' security is threatened. Similarly, every business that wants to grow,succeed, and survive for a long time cannot ignore control systems. Control is one ofthe fundamental forces that keep the organization together and heading in the rightdirection. If all personnel always did what was best for the organization, control andeven management would not be needed. But, obviously, individuals are sometimesunable or unwilling to act in the organization's best interest, and a set of controls mustbe implemented to guard against undesirable behavior and to encourage desirableactions.

a. Gain Organizational Goals

Control is defined as any process that directs the activities of individuals toward theachievement of organizational goals. (page 311 in the textbook). Good control systemswill ensure that the overall directions of individuals and groups are consistent with shortand long strategic plans. Either in the challenging economic times or in the prosperousperiods, if managers fail to control the business, irreparable damages can occur.Inadequate control may result in poor performance, high risk, and bankruptcy. Thosefailures can root from Lax top management, absences of policies, lack of agreed-uponstandards, "shoot the messenger" management, lack of periodic reviews, badinformation systems, lack of ethics in the culture (page 311).

A lot of managers just focus on building a good business plan and getting enormouscapital investments. However, after the plans being set and the responsibilities beingdelegated, it is not necessarily assured that the objectives may be achieved in a way asplanned or wanted. Control systems must be paralleled with planning. Controlling is ofgreat value and importance in a business to ensure that the actual state of a business isalong the lines of what is expected to be. One of the most obvious benefits of controlsystems is that it provides the accurate information for the effective decision-making aswell as maintaining an effective business operation. Thanks to control systems,managers are well informed with continuous feedback so that they can take timelycorrective actions in case the plans are not carried out properly. Hence, effectiveplanning facilitates control and control facilitates planning. Planning lays out aframework for the future and provides a blueprint for control. Control systems, in turn,regulate the allocation and use of resources and facilitate the next phases of planning.

b. Maintain accuracy of standards and prevent lawsuits

To accomplish the organizational goals such as profitability, innovation, satisfaction of

customers, companies try to set up several standards to compare with the actual workperformance and financial performance (Bureaucratic control, Budgetary control,financial control) In those control systems, various standards are established,measured, compared, and adjusted or corrected accordingly. The accuracy of standardsis therefore maintained because the managers will try to find out whether the laid downstandards are not more or less than the general standards. In case of need, they areredefined.

The threat of lawsuits or workplace rule violations is a serious concern for employers,and organizational policies and procedures that address employee behavior candecrease missteps. Workplaces free from harassment, discrimination, bullying andgossip foster better morale and team spirit, and reduce problems that can lead todecreased productivity, efficiency and overall performance. The same holds true whencompanies institute safety and security controls, and provide employee training. In casethe employees fail to meet important standards, the company can apply progressivediscipline to signal the employees that the manager is interested in improving theirperformance, not in punishing them. And if the employees cannot make anyimprovement even after the progressive discipline, the company still let them gowithout fearing of being sued.

c. Use resources efficiently

By applying appropriate control systems, companies can use human and physicalresources efficiently. Under controlling, it is ensured that no employee deliberatelydelays his or her work performance. The company with control systems has sufficientstandards to measure each employees performance so it is very easy to recognizeeither the lazy individuals or the hardworking ones. In the same way, wastage in all thephysical resources is checked. The budget control and the financial control providemanagers with a broad picture of finance operations, enabling them to make timelydecisions on which products/activities should be enhanced or which products/ activitiesshould be eliminated. As a result, companies can gain enormous profits.

d. Motive employees

Employees tend to be motivated by specific, measurable performance standards that

are challenging and aim for improvement over past performance (page 314). Moreover,because all of the work performance will be tracked and measured, the hardworkingemployees will be likely to get rewards and promotion, in comparison with the lazy one.Control systems create the fair environment in the companies so that all employees willdevote themselves to the success of the company. Moreover, they all get feedbacks ontheir performance so they will try to improve their expertise.

* Describe the two financial statements used to control overall organizational

performance

Two financial statements used to control overall organizational performance are Balancesheet and the Profit and Loss statement

a. Balance Sheet

This statement shows the financial picture of a company at a given time. Some describethe balance sheet as a "snapshot" of the company's financial position at a point (amoment or an instant) in time. For example, a balance sheet dated December 31, 2017presents instantly all the recorded transactions through December 31. There are threeelements in Balance Sheet: Assets, Liabilities, and Stockholders equity

- Assets: are the values of the various items the corporation owns. They are the resources of the company that have been acquired through transactions, and have future economic value that can be measured and expressed in dollars. Assets also include costs paid in advance that have not yet expired such as prepaid advertising, prepaid insurance, prepaid legal fees, and prepaid rent.

- Liabilities: are the amounts the corporation owns to various creditors for a past transaction. Liabilities are obligations of the company. Along with owner's equity, liabilities can be thought of as a source of the company's assets. They can also be thought of as a claim against a company's assets.

- Stockholders equity: is the amount accruing to the corporations owners.

Owner's equity is sometimes referred to as the book value of the company, because owner's equity is equal to the reported asset amounts minus the reported liability amounts.

The balance sheet has two sides that must be equal or balance each other out. Thelogic is: a company must pay for its assets by borrowing money from lenders orthrough investors.

For example: If Company A borrow $10,000 cash from the bank, its assets (cashaccount) will increase by $10,000 and at the same time, its liabilities amount will alsoincrease by $10,000

The relationship among three elements of the balance sheet is:

Assets = Liabilities + Owner's Equity

Summarizing balance sheet items over a long period of time uncovers important trendsand gives managers further insight into overall performance and areas in whichadjustments are needed (page 323)

b. Profit and Loss statement (P&L statement)

The Profit and Loss statement (also called income statement) is an itemized financialstatement of the income and expensed of a companys operations (page 323). Thisstatement is prepared for a period, not for a point of time as Balance Sheet. It providesinformation about a company's ability or lack to generate profit by increasingrevenue, reducing costs, or both. A regularly prepared P&L statement either quarterlyor monthly will give owners timely and important information regarding revenues andexpenses and tell them whether adjustments might be necessary to recoup losses ordecrease expenses. The P&L statement also allows outsiders to evaluate the companysability to manage and use companys resources.

There are three main sections of a P&L statement; revenues, expenditures, and thebottom line. Basically, any listed line item on a P&L statement is either a revenue or anexpenditure. Profit and Loss statement normally begins with an entry for revenue,known as the "top line," and subtracts the costs of operating activities, including cost ofgoods sold, operating expenses, tax expense and interest expense. The difference,known as the bottom line, is net income, also referred to as profit or earnings.

Controlling by profit and loss is most commonly used for the entire enterprise and, inthe case of a diversified corporation, its divisions. However, controlling can be bydepartments. As a result, each department has its own profit and loss statement. (Page325)

* My experience with control systems

In my old company, the management effectively apply several strategies to achieve

organizational control a. Bureaucratic control

The management try to set appropriate standards for

b. Market Control

Jane, a secretary at a law firm, had a comfortable job with fixed working hours. Suddenly, her bossinformed her that she would have to start working extra hours from the next week. He said that thefirm had received many new clients and so the workload had increased. However, he reassured herthat she would be paid more for the extra work. Taken aback, Jane refused to comply with hiswishes. Which of the following is a reason why she resisted the change?

A. Jane had formed a different assessment of the proposed change.

B. The change was unexpected and took Jane by surprise.

C. Jane did not understand why the change was being implemented.

D. Jane felt that it was a management tactic.

E. Jane felt that the change was not in her best interest.

If a change is sudden, unexpected, or extreme, resistance may be the initial almost reflexivereaction.

______ technologies have yet to prove their full value but have the potential to alter the rules ofcompetition by providing significant advantage.

A. Bas eB. Emergin gC. Ke y

D. Elevated E. Pacin gPacing technologies have yet to prove their full value but have the potential to provide a significantadvantage that alters the rules of competition. Managers should develop or invest in pacingtechnologies because of the competitive advantages they can provide.